Fertilizer, Ag Stocks Selling-Off on Analyst Comments (AGU, POT, CF, more..)

September 26, 2008 10:59 AM EDT

Agriculture stocks are taking a beating this morning as the bears continue to dominant this volatile market. The stocks in this group are feeling pressure from several downgrades by Citigroup analysts, as well as price target cuts from analysts at RBC Capital.

• Monsanto (NYSE: MON) down 5.9% to $102.66
  
• Potash (NYSE: POT) down 7.7% to $145.87
  
• Mosaic (NYSE: MOS) down 12.4% to $74.07
  
• Agrium (NYSE: AGU) down 13% to $65.03
  
• CF Industries (NYSE: CF) down 20% to $88.19
  
• Terra Industries (NYSE: TRA) down 20.8% to $30.03
  
• Intrepid Potash (NYSE: IPI) down 5.5% to $29.85

Over at Citigroup, analysts downgraded Agrium, CF Industries and Terra Industries from Buy to Hold as they are the North American fertilizer producers that have substantial exposure to nitrogen. The firm believes that the nitrogen market has hit a near-term peak which could take several months to resolve, and said it will not become more constructive on the three stocks until nitrogen prices stabilize. Citi lowered its price targets on Agrium, CF and Terra to $86, $128 and $44, respectively.

Also, analysts at RBC Capital lowered their price target on Agrium from $145 to $105. In addition, the firm moved its price target on Potash from $375 to $250. The firm's new price targets represent a reduction in Agrium's target by 28% and a 33% reduction in Potash's target. RBC maintains its Outperform ratings on both Agrium and Potash.

Despite the lowered targets, RBC seems very confident that the fundamentals at Potash and Agrium have not changed. RBC notes that fertilizer fundamentals remain strong due to high crop prices, low grain inventories and higher fertilizer prices.

Potash Corporation of Saskatchewan, Inc. engages in the production and sale of fertilizers, and related industrial and feed products in North America.

Agrium, Inc. produces and markets agricultural nutrients, industrial products, and specialty products worldwide, as well as involves in the retail supply of agricultural products and services in North and South America.

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• Citi
• RBC Capital

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